Good evening StockBandits!
Following last week’s ramp, a rest is a welcomed sight for many traders, and today we saw one begin. Early weakness set the tone for the day as the indexes sagged early before spending the majority of the session in a choppy range. Some afternoon weakness brought on new lows for the session, however, as the market went out on its lows.
Both bulls and bears alike can find appreciation for this dip, as it actually benefits them both. Buyers can have another chance to put cash to work at lower levels, while those caught short last week found a little relief today.
From a technical perspective, this is also good to see for a couple of reasons. First, it helps to prevent the market from becoming too overbought in the near term. Anytime the market becomes too stretched in any single direction, a hard reversal becomes more likely. Second, with key resistance levels looming just overhead, a little time to digest last week’s move will allow some basing action ahead of a breakout attempt (if one occurs). That may help to prevent a false breakout from an overbought market which pushes just beyond resistance, only to see profit-taking kick in. By resting ahead of a breakout attempt, stocks might be able to gather momentum rather than lose it.
Tonight there are many stocks which still need more rest and basing action before tradable patterns will emerge, and that’s alright. My watch list is limited for that reason, but I do expect that to change in the days ahead. There are still some setups I like for Wednesday, however.
I’ll cover my game plan for tomorrow in the video, and as always, feel free to share your own thoughts, trade ideas, and questions down below in the comments section.
Here is tonight’s video:
The Bandit Broadcast Video – Click to Watch!
–
Video Stocks Discussed: CAGC, GDX, FOSL, CMG, LULU, BVN, EGO, DLB, RIMM, LFC, ECA
Swing Trading Candidates:
ECA remains in a downtrend and here it is turning lower once again after a rising trend line got broken today with expanding volume. I like the risk/reward here for a short sale, so I’ll be using $28.10 as my trigger price for an entry (a few cents beneath today’s low). As with all swing trades, my stop and target levels will be on the Hit List.
Bullish Watch:
CAGC, ARNA, GDX, FOSL, BVN, EGO, JKS, CMG
Bearish Watch:
CRK, DLB, STRA, RIMM, LFC, LULU, BEC, ASIA, LNCR, ECA
The Hit List will be coming out soon with discussion on open positions and swing trade stops and targets, so be sure to watch for it.
